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Perth residents face rent crisis

AM - Saturday, 17 February , 2007 08:18:00

Reporter: David Weber

ELIZABETH JACKSON: Perth is facing a rent crisis, with tenants being forced out of their homes due to skyrocketing costs.

Figures recently released in Victoria show rents have climbed by as much as 50 per cent in some Melbourne suburbs.

But the western capital is experiencing its own problems, with predictions of an increase by as much as 50 per cent across the board, over two years.

Perth has never faced such a drastic rise, and support agencies say some landlords are using high demand to make fast money, as David Weber reports.

DAVID WEBER: New figures on house prices show Perth's growth rate in the December quarter was considerably lower than the previous quarter.

The President of the Real Estate Institute in WA, Rob Druitt, has described it as a return to normality.

But Mr Druitt says rents are expected to continue going up this year.

ROB DRUITT: Yeah, rental vacancy has dropped down quite dramatically, we're down to about 1.6 per cent, which is around the same level as when we had the bottleneck of rentals in 2006.

DAVID WEBER: What kind of rent increases are you expecting in Perth?

ROB DRUITT: We've seen throughout 2006 around 18 or 20 per cent increase in rents, and we would anticipate a similar increase over the following year.

DAVID WEBER: So that's up to 50 per cent over two years?

ROB DRUITT: It could very well be, and particularly if the State Government doesn't jump in now and assist with supply, and it can certainly do that by providing meaningful tax relief for first home buyers so that they can get out of the rent cycle and into a property.

DAVID WEBER: Rob Druitt says rent prices in Perth have traditionally moved at a snail's pace, and the city's never seen anything like this current growth.

Jim Millichamp works in a cafe full-time.

One day he was told his rent would be going up by nearly 50 per cent.

JIM MILLICHAMP: The rent went from $310, it's gone to, it was advertised at $450, and I know that they're bidding, but you know it's going to be more than that.

DAVID WEBER: Had you had rent rises before this?

JIM MILLICHAMP: Nothing like this. I had, but I've never seen anything like this.

DAVID WEBER: When you were looking for a place, was it a case of having to bid for the place in terms of how much you were prepared to pay?

JIM MILLICHAMP: Yeah, but all the bids, they weren't disclosed to each other, so we didn't know what each other was bidding, so you only get the phone call when it's too late. And I've tried to outbid on the phone call but they say that's not fair to, you know, this person bid more initially. So if you've got the finances you can do it, but not all of us are on, you know, mining wages.

So the people who are born and bred here have just been swept under the carpet.

DAVID WEBER: Rob Spinks is the Executive Director of the Tenants Advice Service.

He says the majority of the calls that are coming through are from people who can't afford increases in rent.

ROB SPINKS: I think that there are also landlords out there who have been capitalising on the situation.

DAVID WEBER: Would it be true to say that the call on your service is now coming from groups of people that you wouldn't have had to advise in the past?

ROB SPINKS: We're getting calls from people who are facing having to leave a house because they can't afford the rent. Generally, in the past, it would have been mainly the lower income people. There's no doubt we're getting calls now from middle-income people as well.

ELIZABETH JACKSON: Rob Spinks, the Executive Director of the Tenants Advice Service in Perth, speaking to AM's David Weber.